A journey through policy, progress, and being a patient by Kate Steadman

January 31, 2006

The Senate has set dates for Medicare Part D hearings, and not a moment too soon:

Medicare officials will testify before the Senate Committee on Aging on Thursday about how they are addressing various problems with the Medicare prescription drug benefit, the Washington Post reports. According to the Post,
many lawmakers "got an earful" from beneficiaries about the drug
benefit while visiting their districts over the winter congressional
recess, and they will now consider whether to make legislative
adjustments to the program or "wait and see whether the glitches work
themselves out." Lawmakers' "big concerns" with the drug benefit
include the "dizzying array" of drug plans from which beneficiaries can
choose and the "coverage breakdown" for beneficiaries who are eligible
for both Medicare and Medicaid, the Post reports. Next Wednesday, the Senate Finance Committee will address the drug benefit in a follow-up hearing to a meeting last week with committee members and HHS Secretary Mike Leavitt.

The question here is what legislators can come up with for long term viability. As I discussed over at TPMCafe, not enough seniors have enrolled so far, or are planning to by the May deadline. But the May deadline isn't the problem -- it's the program itself.

There are several options, most not very likely and some extremely unlikely. The grandest option, of course, would be to repeal the whole thing and start from scratch. I think we all accept that's more of a "when pigs fly" kind of likely.

But what if we changed the legislation to allow HHS to negotiate drug prices? Ezra summarizes Economist Dean Baker's analysis:

Baker, clever economist that he is, compared Medicare Part D's
projected pharmaceutical costs to Congressional Budget Office data on
what other countries pay. In 2006, Medicare beneficiaries will spend an
estimated $113 billion on drugs. If their costs were equivalent to the
next most expensive country, they'd be paying only $86 billion. If they
got the prices of the cheapest country, they'd spend $61 billion. And
if, as one would expect, they used their larger size to get
proportionately larger savings, they'd only spend $42 billion. Over a
seven year projection, the standard benefit would cost $1.361 trillion,
the high estimate in a single-payer system would cost $834 billion, the
middle estimate $602 billion, and the low estimate $418 billion. And
those numbers include adjustment for increased drug usage due to lower
costs. Add in, too, the $38 billion savings in administrative costs and
you've got quite a chunk of money -- in the optimistic estimate, almost
a trillion dollars -- the Bush administration passed up on.

So a cool trillion or the program's total collapse? Unfortunately the Administration, unlike AARP, probably won't be doing an about-face on that policy anytime soon. I hate to be doomsday about this, but it seems like the only solution we can expect to see right now is an extension on the enrollment date until Dec. 31st, but that won't fix a thing. Unless we see some kind of turn around in the 2006 elections, the program is probably doomed. Premiums will rise, but it will take a few years for it to totally collapse, and take its place history as one of many failed U.S. health care experiments.

January 30, 2006

Graham has an excellent post on changes to be made in medical school curricula:

But one area where I think we’re lacking—because medicine has changed so
much—is the treatment of the chronic disease. We focus so much on the
acute still in medicine, when our patients have primarily shifted to
the chronic. Sure, as residents we have clinic time where we see
patients as outpatients in a chronic disease setting—but most of our
residency (and much of our medical school) training is still focused on
the acutely ill patient. While this definitely hammers home important
concepts in many diseases, which can then be translated to the
outpatient basis, I wonder if there’s more we should be learning. If
you look at physicians as a whole, they’re not working in hospitals,
taking care of acute patients. They’re working in private practices,
seeing outpatients.

In terms of care, the U.S. is great at acute treatment and really lousy at preventative care. Perhaps the focus of medical school is reinforcing this problem?

I have to think, however, that this is a difficult balance to strike, there only being so many years we can keep people in medical school. But our system produces much less general practitioners and primary care physicians than other nations, another undesirable result of the medical school curriculum (and also of market distribution, of course -- specialists get paid a lot more). Both of these facts are costly in our health system -- specialists are more expensive than generalists, and poor management of chronic illness can result in hefty costs over time.

We have had “cheap” high deductible insurance products for years and
years. I personally have had one off and on since 1998 and they were
around for long before that. And as the old high deductible “major
medical” policies were around when health care was cheaper, and
therefore were less expensive than they are now, according to Hubbard’s
logic we should never have had any uninsured in the first place. And
yet in California we have more than 6 million uninsured who somehow
have failed to buy one. Is it possible that price isn’t the only issue
here?

He's absolutely correct -- most people envision health insurance as something that covers medical expenses. The majority of people with catastrophic plans aren't going to see their worse-case scenario of $50,000 medical bills. What they will see are cases of the flu, annual exams, random aches or pains. And catastrophic plans don't cover those expenses.

Besides the fact that certain aspects of these plans are unappealing, there's no evidence that HSA's are going to solve our "uninsured problem". Studies estimate that 2.9 million more people will enroll in health insurance via HSA-type plans. That's 2.9 out of our 46 million uninsured, or approximately 6%.

Make no mistake, HSA's will be lauded as a cure-all in tomorrow's SOTU. They're anything but.

January 27, 2006

The New York Times is reporting on banking industries and their plans to get in on the CDHC gold:

By 2010, more than 15 million Americans, or about 10 percent of all
those insured, will have a health savings account, according to an
estimate by DiamondCluster International, a management consulting firm.

The
average individual's account balance, it projects, will grow from
$1,500 today to about $3,500 in 2010. Even if people pull out some or
all of their money to pay their medical bills, the ballooning balances
may mean that $75 billion or so in new money to manage will soon be at
stake.

So here's the thing. We've already discussed the 80/20 rule, and why HSA's don't make a lot of sense when you factor in the way health costs are distributed. But we're talking about a substantial period of time to even see HSA's supposed effects if only 10% of the population is projected to have them in 5 years.

Further, the amount of money in most accounts is projected to be $3,500? That will barely cover an individual's deductible, and only about a third of a family's. Looking at those stats, I really can't see how they'll make a dent in actual spending.

Trends, however, catch on easily. And the trend of shifting costs to employees is already among us.

Well, I know about a health care system that has been highly
successful in containing costs, yet provides excellent care. And the
story of this system's success provides a helpful corrective to
anti-government ideology. For the government doesn't just pay the bills
in this system — it runs the hospitals and clinics.

No, I'm not
talking about some faraway country. The system in question is our very
own Veterans Health Administration, whose success story is one of the
best-kept secrets in the American policy debate.

January 26, 2006

Via Matt Holt, it appears that HSA's aren't the only thing on Bush's SOTU agenda this year (from WSJ):

President Bush: The government must work to reduce costs through the spread of information technology, which many in the health field say will help reduce the rising costs substantially; litigation reform to prevent these frivolous lawsuits from running up the cost of medicine, either through the practice of defensive medicine and/or premium increases, and actually drive good docs out of business. I'm particularly concerned about OB/GYNs; we have an OB/GYN crisis in states because of these lawsuits.

• The vast majority of patients injured in malpractice do not sue. Research has found that 3-4% on average end up filing lawsuits, and many of these are simply to glean what happened

• Malpractice awards are lower in the United States on average than other countries

• Research indicates no jury bias towards patients, in fact juries tend to be biased in the favor of doctors.

• Research shows that juries aren't awarding any more money
(adjusting for inflation and the cost of injury) than they did 40 years
ago, nor are there more lawsuits

• The idea of defensive medicine is almost impossible to measure, but studies ambitious enough to do so have found very slightly higher rates of increased intervention. States with tort reform have slightly lower rates of increased spending (5-7%), but that benefit appears to disappear after 10 years

• All spending related to malpractice is estimated to equal less than one half of one percent of all health care spending

• There is no evidence of a rash of doctors leaving practice because of malpractice costs

Issues like tort reform and buzz-worthy insurance plans easily gain traction with the public. But neither of these solutions will make a dent in rising costs. They're only prolonging substantial reform, exposing more and more families to financial ruin in the meantime.

What do you want to do? Keep trying things we know won't work? Or something that does?

Ezra has a fantastic post deconstructing Robert Samuelson's WaPo column. From Sameulson:

Now, some
say that because the "market" has failed, greater government control is
the answer. Private insurance has high overhead costs and generates too
much paperwork. True. Still, there's not much evidence that over long
periods government controls health spending any better. From 1970 to
2003, Medicare spending rose an average of 9 percent annually, reports
the Kaiser Family Foundation. In the same years, private insurance
costs rose 10.1 percent annually. Part of the gap reflected private
insurance's greater generosity. It covered drugs while Medicare didn't.

And Ezra lays down the smack:

First, Samuelson didn't read the study.
It evaluated "common benefits," or benefits provided by both Medicare
and private insurers. Prescription drugs were not included. Moreover,
the apparent closeness comes from the so-called "managed care
revolution", where private insurers switched from traditional insurance
to HMO's, creating a one-time drop in growth during the mid 90's.
Where growth had previously hovered between 10-12 percent, it
plummeted to the low single digits through the 90's. As the decade
closed, however, growth, well, grew. Between 2000 and 2003, private
spending has grown at an average of 8.8%, with increases each year
(2003 hit 9.6%). Medicare averaged out 5.9%, with 4.7% growth in in
2003.

Several of you (via email and comments here and at Ezra's) seem to think I'm claiming the VA's superiority based solely on customer satisfaction information. I understand your concern about this claim, because to do so would be utterly ridiculous. Just because people like something better doesn't mean it works better.

I used the patient satisifaction information on top of the information I've read several places about the VA's excellent patient results and treatment standards. I've dug some of it up to prove I'm not that crazy.

From the New England Journal of Medicine:

In fiscal year 2000, throughout the VA system, the percentage of patients receiving appropriate care was 90 percent or greater for 9 of 17 quality-of-care indicators and exceeded 70 percent for 13 of 17 indicators. There were statistically significant improvements in quality from 1994–1995 through 2000 for all nine indicators that were collected in all years. As compared with the Medicare fee-for-service program, the VA performed significantly better on all 11 similar quality indicators for the period from 1997 through1999. In 2000, the VA outperformed Medicare on 12 of 13 indicators.

The quality of care in the VA health care system substantially improved after the implementation of a system-wide reengineering and, during the period from 1997 through 2000, was significantly better than that in the Medicare fee-for-service program. These data suggest that the quality-improvement initiatives adopted by the VA in the mid-1990s were effective.

The Annals of Internal Medicine recently published a study that
compared veterans health facilities with commercial managed-care
systems in their treatment of diabetes patients. In seven out of seven
measures of quality, the VA provided better care.
It gets stranger. Pushed by large employers who are eager to know what
they are buying when they purchase health care for their employees, an
outfit called the National Committee for Quality Assurance today ranks
health-care plans on 17 different performance measures. These include
how well the plans manage high blood pressure or how precisely they
adhere to standard protocols of evidence-based medicine such as
prescribing beta blockers for patients recovering from a heart attack.
Winning NCQA's seal of approval is the gold standard in the health-care
industry. And who do you suppose this year's winner is: Johns Hopkins?
Mayo Clinic? Massachusetts General? Nope. In every single category, the
VHA system outperforms the highest rated non-VHA hospitals.

Substantive research, along with patient satisfaction, shows that the care delivered at the VA, once the worst in the country, is now among the best.

Something else the VA has that rest of us non-vets don't? Electronic medical records, which have transformed efficiency and standards of care. It's the only example of in-the-U.S. totally government-run medicine, and it works. Bettter than Medicare, and much better than the private sector.